How to Build and Maintain Good Credit Score and Credit History
Nowadays, a lot of things are becoming increasingly difficult to do without a good credit history, while at the same time, those days of easy credit has probably gone forever, thanks to the financial crisis that has put a squeeze from lenders and borrowers alike.
Not only will a good credit history help get the loan you need or an apartment you like, it can even help get you the job you’re counting on. Today, consumers are recognizing the need to control their financial situation. A recent survey by Citi found that 92% of Americans feel that because of the economic downturn, it’s particularly important for them to focus on managing their finances responsibly. Yet 82% admit they could do a better job handling their money.
To help consumers build and maintain a good credit history, Citi Forward Card, the only credit card that lowers the purchase interest rate when cardholders use credit wisely and rewards them with ThankYou Points every time for paying on time and staying under the credit line, offers the following tips to make credit work for you:
- Understand that credit is not free money. All good things have their limits. Your credit does too. The credit your credit card offers you is a loan that must be paid back – with interest if you don’t pay the balance in full.
- Know your limits. Figure out how much credit you can afford. Don’t take on monthly credit payments unless you’re certain you can meet them. A general rule of thumb is you should keep your debt-to-income ratio – which looks at how much you owe each month compared to how much you earn – below 28%.
- Get rewarded for good behavior. The best way to start establishing a credit history is with a credit card. Get one that rewards you for good financial behavior, such as the Citi Forward Card – the only credit card that lowers the purchase interest rate by a quarter percent when you use credit wisely and provides reward points each billing period for paying on time and staying under the credit line.
- Pay on time, every time. If you can’t pay your balance in full, you should at least pay the minimum payment due on time, every month. Many card issuers offer free alert service that let you know when, for example, your payment hasn’t been received. You can sign up for payment reminders to make sure they never miss a payment.
- Don’t take on too much. Only apply for the credit cards that you need. Too much available credit can make you look like a risk to future lenders. Plus, the more credit cards you own, the harder it is to track how much you owe and keep up with timely payments.
- Conduct an annual check-up. Review your credit report at least once a year to make sure it’s accurate (you can get free credit reports from all three agencies at annualcreditreport.com). Serious errors can appear in a credit report at any given time, and can cause credit to be denied.
- Keep in touch. If you find you are having trouble making your payments, avoiding it in the hopes that it’ll go away is not a solution. In fact, it’ll cause more problems. Instead, call your credit card company right away to work out a plan.
The more you know about managing your finances, the better equipped you’ll be to secure a healthy financial future.
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